New government programme promises continuity in the development of unemployment security
The main message of the government programme is that unemployment security will be developed and active labour policy measures will be increased, the goal being to shorten unemployment periods and prevent prolonged unemployment.
As the goal is to adjust unemployment security to the needs of the changing working life, the set of means includes reforms that have already been discussed and are also partly under preparation.
A good example is the mention that those outside control of working hours should not remain outside adjustment, and also that different monthly working rhythm should not make it more difficult to compensate the financial losses resulting from unemployment. The importance of working hours is significant in the current legislation, and it no longer fits very well together with the realities of the working life or the use of the income register. The application practice related to control of working hours has become more flexible and takes the big picture better into account, but solutions stated in the law would be welcome.
The government programme promises to renew the system of consequences within unemployment security and make it fairer in such a way that the rights and obligations are in balance. In practice, it probably means adjustment of labour policy consequences i.e. periods for which no benefit is paid i.e. suspension periods. Compared to the other Nordic countries, Finland has severe consequences in terms of money for different neglects which are often caused by misunderstandings or challenges in the flow of information rather than intentionality.
In order to take new forms of working into account the government programme promises to continue the development of combination insurance. It means being able to insure salaried work and entrepreneurial activities at the same time under unemployment security. This has already been looked into. It seems that such insurance could be so expensive for the policyholder that it would not necessarily work in practice. Another option is to change the definitions of salaried employee and entrepreneur and identify in more detail entrepreneurship paralleled with salaried employees.
It is essentially important that the government programme will continue to develop the condition regarding employment which is a requirement for receiving unemployment allowance. The goal is to take the changes of the labour market and the opportunities of digitalisation better into account.
In practice, the above means converting the condition regarding employment into euros. That offers an opportunity to increase the equality of different forms of working under unemployment security. It also opens up the road for advanced automation of unemployment security.
Converting the condition regarding employment into euros alone is not enough, because the other component of digitalisation, the income register, is not directly compatible with the requirements of the Unemployment Security Act. Hence we welcome the mention in the government programme that in connection with the reform of social security the information content of the income register will be expanded especially from the point of view of transition of work, and smoother payments of unemployment security are specifically mentioned as the reason.
Farewell to the activation model
In accordance with the promises made before the election, the dissolution of the activation model is recorded in the government programme. That is, however, conditional and awaits for decisions on measures with similar effects on employment.
In the replacement model, personal job-seeking obligation and services, such as e.g. training and rehabilitation, shall be agreed on in the employment plan of unemployed persons. That should not be difficult, because the employment plan is part of the normal service path, and the job-seeking obligation is already included in the current Unemployment Security Act. It is separately mentioned, though, that the resources for personal service in the TE Offices will be secured, which is only polite, as the weight of the employment plan is increased.
Other details regarding unemployment security are also recorded in the government programme.
The funding of pay subsidy will also be continued under the unemployment security clause after 2020. It means that unemployment security costs will be used for funding pay subsidy in the future, too. That is probably necessary, because the government programme outlines that the use of pay subsidy will be increased considerably.
In overall examination related to life-long learning, the integration of unemployment security into the new system will be taken into account. Possibilities for studying on unemployment benefit have been continuously increased, and it is certainly good that the system will be examined on the whole.
It is commendable that the government intends to determine the criteria for sickness allowance, rehabilitation subsidy and unemployment security in such a way that a person receives the appropriate benefit. At present, there are many disabled people who receive unemployment benefit, because unemployment security is used to cover the delay in the processing of disability benefits. The situation results in many exceptional cases within unemployment security which unnecessarily make the multi-dimensional legislation even more difficult and complicated.
The Finnish earnings-related unemployment security system is based on voluntary insuring for historical reasons. The government programme takes a stance on that by promising a further examination on transferring to general earnings-related unemployment security. The subject is delicate for the trade unions. It will be interesting to follow the progress of that entry.
More detailed content will be determined in tripartite preparation
The details of renewing the unemployment security will be determined in tripartite preparation. It is recorded in the government programme that the government will initiate tripartite preparation work which will draw up proposals on the measures that support the reaching of the government’s employment goal.
The support of labour market organisations is also relied on more broadly, as the improved adaptation to trade cycle fluctuation will also be developed together with the labour market organisations. It is mentioned that it means, for example, strengthening the trade cycle buffer of the Employment Fund. That can be done by affecting the unemployment insurance contributions and the section that regulates the maximum size of the fund.
A strong buffer means sensible maintenance of finances. The downside is that with a strong buffer the labour markets have a tendency to flex towards unemployment and not towards labour terms.
It is positive that the government uses the expertise accumulated in the labour market organisations in the development of unemployment security. The government programme also has the spirit of developing the Unemployment Security Act from the point of view of supporting employment. For that the five parties in the government can be thanked.